Don’t buy stocks – for real, this time. That was the message Jeffrey Gundlach delivered to investors last Tuesday.

Among riskier asset classes, only equities have performed well since February 14, the date of Gundlach’s previous remarks to investors, during which he advised investors in his Doubleline funds to avoid those assets – Including equities. In his most recent conference call with investors last Tuesday, he reiterated that forecast, this time singling out equities in particular.

“I really think we are not going to be making money on stocks bought at this level,” he said.

Gundlach identified two “triggers” that could set off a decline in stock prices – a worsening of the fiscal crisis in Europe and the ongoing inability to confront debt problems here at home, regardless of who is elected president this fall.

Gundlach, who is the founder and chief investment officer of DoubleLine Capital, titled his remarks to investors “To QE3 or not QE3 – That is the Question.” A quote from Shakespeare accompanied each slide in his talk, all of which are available here.

I’ll review Gundlach’s concerns about the equity market, but first let’s look his forecast for monetary policy and interest rates.

Expect the Fed to act aggressively and rates to be stable

The title of Gundlach’s talk points to the recurring question of whether the Fed will engage in further quantitative easing. But that question, Gundlach said, has already been answered.

“We are already doing QE3,” he said, through the Fed’s bond-buying program called Operation Twist. He called that action a “risk party” – a Fed policy designed to incent investors to move into riskier asset classes – including equities.

The Fed has achieved its goal. Each episode of quantitative easing has moved equities to higher prices, and when those measures stopped, prices declined:

The more important question, he said, is if the Fed throws another such risk party, will anyone show up? A monetary easing by the Fed that fails to have its desired effect represents the “real downside case” that Gundlach and his team at Doubleline fear, and it underlies the conservative positions of his funds. For example, his Total Return fund currently has 20% in cash.

Gundlach, though, is confident the Fed will act aggressively to stem a potential economic decline. “We believe at Doubleline that the Fed stands ready to do whatever you want to call the stimulus” if nominal GDP growth threatens to go negative, he said.

The danger of rising rates is not imminent, according to Gundlach. He said the current environment is dominated by stable rates. “They may rise over the long term,” he said, “but the Fed cannot even think about a preemptive strike on inflation, given the deficit problem.”